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Quantitative Management Manifesto

If the Agile guys can have a Manifesto, then Quantitative Management can have one too! The theme of this site is to describe management grounded and quantified by data and modeling. A set of operating guidelines for quantified Program Management of electronic product development are stated in this Quantitative Management Manifesto. These points can be adapted to other program types and situations, maintaining of course the thematic link between operations and quantified understanding.

Development Lifecycle

THE organizing mission for a Program Office in a product-development role is to "execute the development lifecycle". This organizes work around the programs, and brings with it side benefits including the ability to optimize time to market, continuously improve product quality, manage tooling and materials, and focus and manage project and organizational finances, staffing and processes.

In many organizations, the Development Lifecycle is in tribal memory and is not explicitly defined or managed. Achieving a tangible, defined but open description of this process is important to achieving the benefits. This has to be done in a way that avoids imposition of bureaucracy and promotes organizational development.

If the organization's development lifecycle isn't well defined, people throughout the organization may have disparate ideas of what it is, particularly as you work to define specific tasks, dependencies, deliverables, and responsibilities. Writing it down often surprisingly turns into a complex design exercise! Everything was fine until you tried to write it down... But that meant you had nothing tangible to use to improve the organization's effectiveness at delivering and maintaining products. It may be helpful to use a Delphi process (described here and here), originally developed by the RAND Corporation, for organizational members to converge on definition of the process.

The lifecycle definition is a place to invoke standards the organization desires to be uniformly applied to achieve overall organizational product development objectives. These objectives may include such things as time to market or product quality. Designing tasks, ratcheting task metrics, and managing task sequencing are key to achieving improvement to these objectives. Implementing these within structure of a program takes advantage of focused energy and leadership.

The lifecycle will inevitably be tailored to the objectives and capabilities of the organization and project instance, within the hierarchy of objectives. Lifecycles for a particular product type (e.g., chip, system software module, etc.) will have similarities among multiple organizations implementing them.

In development of computer products, different lifecycle practices are applied to specific product technologies.

  • Chip product development tends to use an adaptation of the Concurrent Process lifecycle described on this site.
  • Board-level products often use Waterfall methodology.
  • System software is frequently developed within a Release Train methodology.
  • Agile development is frequently applied to IT projects and application development projects. Scaled Agile Framework has a very nice graphical summary of the Agile processes, including rollup of modules into a system project.

Program managers have to determine appropriate synchronization when interdependent product components are developed concurrently using disparate lifecycle methodologies.

The linked Powerpoint Presentation and webpages speak to practices I've found effective, and are a basis on which to begin the discussion in the organization.

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Lifecycle methodology for custom chip development.
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Concurrent Process Lifecycle (click image below to explore)
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Net Present Value

(22 June 2010) Another focusing general concept that helps manage programs, is to evaluate the Net Present Value of the program. NPV (described on Investopedia and Wikipedia) evaluates the discounted cash flow of the program including both development cost and projected market value of its resultant product or service.

NPV is conceptually similar to Return on Investment (ROI). ROI, however, does not account for time affecting program development or shipment rate. NPV uses a discount rate to affect the value of cash flow over time. The present value of one dollar now is one dollar, but the present value of one dollar a year from now is one dollar discounted by the discount rate, because that smaller amount of money could be invested starting now, at the discount rate, to yield the needed dollar a year from now.

The discount rate is typically the company's cost of funds (or if this isn't available, the company's Return on Assets ROA, or perhaps the current GDP growth rate). A more sophisticated method would use WACC, weighted average cost of capital. A positive NPV then indicates a program that at least matches the company's current return rate. A related measure, Internal Rate of Return (IRR) uses absolute program cashflow to determine the effective discount rate required to reach NPV of $0, indicating the effective return rate of the program (which likely should at least match the company's cost of funds). Microsoft Excel provides functions to calculate these and other related values.

These metrics are useful to project managers because they require development of a model of the planned program including expenses from all program participants (personnel, prototype material, contractors, IP, fees, tooling etc.), program schedule (of course including all dependencies both internal, and on other programs), product cost, price, and anticipated shipment rate. It frequently is the principal input to the program budget over the full time period of the program which could perhaps span several budget periods - quarters or fiscal years. Since cash flow is discounted, earlier expenses and returns are more valuable than later ones, consistent with ability to predict the future. Usually development costs (earlier) are more accurately predictable than is shipment rate (later) which would otherwise dominate program costs and returns. Positive NPV is frequently a gating factor for initiating (or in some cases continuing) a program because it quantitatively indicates anticipated product positioning plus realistic plans for development, manufacture, sales and support.

This plan must be kept up-to-date with current knowledge as conditions change during program execution, and represent a quantified best-guess of the anticipated flow of the program, a useful guide when making decisions that affect development or product cost, schedule, or product shipment volume. It represents a quantified and actionable best-guess of the program's future at any point in time.

Links

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PMI-SV PMI Silicon Valley

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Quantitative Organizational Effectiveness

Lifecycle management embodies the organization's product delivery process, which uses and drives many competency processes throughout the organization. Excellence in delivery process depends on effective design of all layers of organization (see powerpoint above) and excellence of competency process execution.


Geary Rummler and Alan Brache have captured the essence of organizational design and improvement in this excellent book.

Rummler-BracheImproving Performance: How to Manage the White Space in the Organization Chart
Third Edition
Geary A. Rummler and Alan P. Brache
Copyright © 2013 by John Wiley and Sons

Published by Jossey-Bass



Rummler and Brache establish a basis for Business Process Management (BPM). Microsoft Visio Professional 2010 or later provides tool support with graphical content for defining and managing BPM. You need the Pro version in 2016 to link data to shapes. Visio runs on Windows environments only.

Microsoft Visio Microsoft Visio Professional 2016

Microsoft Visio Pro for Office 365
Buy via "Purchase Services" when logged in to the Office 365 Admin Center.

Microsoft Corporation


Introductory book on Microsoft Visio.

Rummler-BracheMicrosoft Visio 2013 Step by Step
Scott Helmers
Copyright © 2010 by Scott A. Helmers

Published with the authorization of Microsoft Corporation

O'Reilly Media, Inc.



Business Process Diagramming using Microsoft Visio 2010 with VBA. Shapes on a Visio document page can be positioned and sized using VBA. Data from an external source can be linked to shapes, and you can use that to guide that manipulation. This requires the Pro version in 2016. The Visio object model is unique, with shape properties described in a Shape Sheet object and requiring quite unusual programming constructs. This book describes the Visio object model.

Visio BPM DiagrammingMicrosoft Visio 2013 Business Process Diagramming and Validation
David J. Parker
Copyright © 2010 by Pakt Publishing




Microsoft Project is a powerful GANTT project task management tool. Its programmability with VBA is an important characteristic that makes it interesting to this website. Project runs on Windows environments only.

Microsoft Project 2016Microsoft Project 2016

Microsoft Project Pro for Office 365

Buy via "Purchase Services" when logged in to the Office 365 Admin Center.

Microsoft Corporation


SmartSheet is a collaborative GANTT tool that works with Google Enterprise including Google Sheets. It is web-based only and is independent of device-environment, so is being adopted for use in Google+Mac environments. SmartSheet can import and export Microsoft Project files. It has some important limitations to programmable function as used by this website and task UID function is limited. However, SmartSheet can make MSProject plans available in non-Windows environments.

Smartsheet LogoSmartSheet


AQL Statistical Yield Monitoring.

Squeglia c=0Zero Acceptance Number Sampling Plans (Fifth Edition)
Nicholas L. Squeglia
Copyright © 2008 by American Society for Quality



Quantitative reference to help determine sample size to achieve yield within specified tolerance. Helpful in sizing and evaluating a prototype run, or negotiating yield sampling plan with supplier for production.


Statistics references.

Douglas C. MontgomeryIntroduction to Statistical Quality Control
Douglas C. Montgomery
Copyright © 2005 by John Wiley and Sons




Herkenhoff and FogliApplied Statistics for Business and Management using Microsoft Excel
Linda Herkenhoff and John Fogli
Copyright © Springer Science+Business Media 2013



McClave and  SincichStatistics
(Prepared Exclusively for the Foothill College Mathematics Department)

James T. McClave and Terry Sincich
Copyright © 2003 by Prentiss-Hall, Inc.